Based on how our provincial governments deal with public finances, we may never be able to climb out of debt or meet the stated goals for Nova Scotia outlined in the Ivany report. Nova Scotia's staggering deficit totalling $678.9 million for 2013-14 is an alarming statement of how our governments have failed to manage the province's fiscal affairs.

Just as disturbing is that these recent deficit numbers will soon be forgotten by the public and abandoned as an interest in the media. We will simply move on, expecting more government spending in the months and years ahead.

The government will spend money as if we had it. But the hard fact is we don't. When it comes to provincial deficits and debt, we suffer from a collective fiscal dementia: Deficits trigger short-term memory loss and our $15-billion provincial debt entices long-term memory loss.

Our finance ministers, past and present, usually blame previous governments for the fiscal status quo. It's what I call the Pinocchio syndrome: They promise to balance their budgets, and they forecast better times under their stewardship; but they have not provided a legally binding strategy for the government to pay down or eliminate the debt.

Nova Scotia Finance Minister Diana Whalen had this to say about her government's shocking budget statement: "We are trying to examine what we're doing and look for better ways to do it." Reversing that logic might be the better pathway. Should this government be looking for better ways "not" to do what previous governments have been doing?

The Ivany report stated that if we keep doing what we're doing, government will be crippled by a shrinking tax base, skyrocketing health costs and irreversible debt.

During 2013, the provincial debt grew by $819 million. Yet the provincial government will spend $9.9 billion this year, up from $9.6 billion. Our debt-to-gross domestic product ratio has grown to 37.8 per cent. The province's GDP stands at about $40 billion. The Ivany report calls for the debt-to-GDP ratio to drop to 30 per cent or less. Does the current government even have this as a policy goal?

On more than one occasion, the Ivany commission has stated that we are teetering on the brink of long-term decline. And, unless we reverse our exposure to debt, we will decline faster.

Before any of the ambitious goals outlined in the Ivany report can be achieved, the province has to address its debt head-on every year as a matter of public policy and in every government budget line. If not, all of the report's goals laid out for the next decade will be sabotaged by a growing debt that will diminish our capacity to stimulate business startups, support universities and health care, and fund municipal infrastructure.

To be fair to Whalen, deficits have been almost inevitable under governments of all political stripes, not just hers. And nearly all provincial governments have simply tacked their deficits onto the debt and proceeded to spend into new ones.

The only NDP government elected in Nova Scotia produced a thin — albeit questionable — surplus of $16.7 million for 2013-14, and actually paid $38 million against the debt. The newly elected Liberals rejected that surplus and posted an updated budget forecast in December 2013 that projected a budget deficit of $481.1 million. But by April, the deficit had ballooned to a record $678.9 million.

To complicate matters, the province's revenues are slipping. Nova Scotia will have difficulty offsetting revenue losses for 2014 without imposing tax increases and falling short of its fiscal targets. More and more provincial programs are proving unaffordable. Watch for deep cuts and tax increases.

The provincial debt is not just a public accounting statement that we run into at budget time. It crimps our ability to grow economically, stymies our social programs, and weakens our competitiveness in Canada and beyond.

We need to become more insistent about reducing the public debt. What fiscal instruments will Whalen's government put in place to prevent the next deficit? Will her government produce a plan which as a provincial law will require the province to reduce its debt even by a small amount every year?

Jim Guy, PhD, is professor emeritus of political science and international law at Cape Breton University.

Recent comments

Obviously, if we're going to really cut the debt it will require a lot more than firing a few public servants. First, we have too many universities in Nova Scotia, and guess which will be the first to go? That will be sad for a lot of southern Ontario high school teachers who get to play professor, but otherwise the place doesn't serve much of a purpose. And Cape Breton has too many aging communities, without an economic base or future, costing an enormous amount of money to sustain. All those old folks will have to move to the same town -- Sydney, probably, but wherever. They sure won't be getting much in public services if we really want to cut the debt, wherever they are. But, no doubt, it is time to be realistic and serious.

A few public servants? Hello! "too many aging communities costing an enormous amount of money to sustain". Where do you think most of their taxes go? To the bloated civil service that's where!

Nova Taxa

August 21, 2014 - 21:54

Greed via wages and perks has infected Nova Scotia like ticks on a deer to the detriment of the economy and drains taxpayer cash to fund it all. Look at the current story about the CB nurse making 250k in one year, lots of comments supporting her to get as much as she can, too bad it's me and you(taxpayers) that foot the bill for nurses salaries. It's to the point where a huge salary is expected and if not getting it people get insulted(our new CBRM CEO for example). The Rubicon has been crossed and there's no comeback. Nova Scotia is broken. Until some decent ideas and people come forth to clean up the mess more people will flee this hellhole. I am VERY close to leaving this place, it's getting stupid here.

How much money do we spend on "governing" this province? What do the analytics say about dollars spent for services delivered, average number of bureaucrats per population count for each province, that kind of thing, where do we rank among the ten provinces. Here's a stab in the dark - I'm betting we have the most expensive and most government service jobs per capita by a country mile!

Time for Nova Scotia to do what New York city had to do some 25 years ago when facing bankruptcy. They fired all of their senior bureaucrats and political advisors. They recruited persons with fiscal knowledge to come in and run the city. They also dispensed with 49% of their over paid public service sector and cut back on the high pension payouts to ex public servants. Can you imagine anything of the sort ever being done in taxa spend Nova Scotia, Not when the best that you can do is elect a fiddler,and ex Naval officer and a maytag man to run the province, and by run I mean into the ground.

my opinion- good letter, problem is todays politicians do what they do to protect/keep their too highly paid jobs, and never NEVER make proper financial decisions- we should look at minimizing the size of government to a small group, and hiring proper planners and engineers to run the province soundly, but keeping the small political group to ensure no dictatorship develops- OR we can put minimum education guidelines on anyone wanting to be in politics- see why the rules won't get changed?----------what was the last full report on anything you can remember that was done by elected officials without hirng consultants to do the real work, then the political types read the headlines...

Staggering to think that a province of 850,000 residents of all ages, only a portion of whom are taxpayers, service a $15 billion dollar debt (that's billion with a b). Yet we have all three political parties and their various power brokers and riding association presidents plotting ways to get elected; in other words to gain power. Power to hire, promote and generally "take care of" those loyal to their party. Maybe it's about time to have a Nova Scotia Party plotting to get elected to take care of our province.